The second afternoon session focused on Current Issues in Corporation Finance. The panelists included Mark Kronforst, Associate Director, Division of Corporation Finance, Securities and Exchange Commission; Brian Breheny, Skadden, Arps, Slate, Meagher & Flom LLP; and Jeffrey Kesselman, Sherman & Howard LLC. The panel was moderated by John Olson, Gibson, Dunn & Crutcher, LLP.
The panel began with a discussion of social media and Netflix, previously discussed by The Race to the Bottom here, here, and here. The panel explained how the Netflix case indicates the necessity for a company to disclose to investors if social media is going to be used to relay information that could materially affect the company’s financials. The panel also emphasized that social media use policies within a company are becoming extremely important now that posts could be construed as materially significant information.
The panel then covered cyber security issues and indicated that disclosures to investors are getting better. Company disclosures used to use the language that if a security attack occurred, then certain issues could arise. Disclosures no longer use “if” and instead disclose that attacks have occurred but did not materially affect the company. This trend is towards greater transparency.
The panel wrapped up with a brief discussion of crowd funding under the JOBS Act. The panel described crowd funding as a good idea gone bad. The difficulty with crowd funding is finding the balance between making capital available and preventing fraud. The accounting costs for a company funded in this manner are too high in relation to the amount of funding received.
The next panel focuses on Ethical Issues in Securities Practice.